Clear as a Haze-Free Daylight: What is a Valid offer under Contract Law?
Consider these two typically boring regular scenarios:
EXAMPLE 1: You met a Mr Abu wanting to sell you his old Lexus for maybe RM80000 to RM90000.
EXAMPLE 2: You met Mr Bakar offering to sell his vintage Jaguar for a bargain price of RM25000.
Which one is a valid offer under contract law?
Hold on, what is an offer?
In plain words, an offer is when you propose something to someone, wanting to make it legally binding once he/she accepts it (Harvey v Facey ).
An offer is the first necessary ingredient to form a contract. Try to think of a contract as a cake with four main ingredients!
The person making the offer is the 'promisor' and the person receiving the offer is a 'promisee' (Section 2(c), Contracts Act 1950). Abu and Bakar in the examples are the promisors and you are the promisee.
Both Abu and Bakar are offering to sell their cars to you. Once you accepted any of these offers, you are legally bound to pay the amount. They have to hand over the car to you. BUT, the offer must be legally valid.
All right, I get it. But...what is a VALID offer?
A valid offer must be:
- precise, definitive and clear so that both parties' rights and duties are fixed and certain.
- the person making the offer must make it clear that he will be bound by his terms once it is accepted.
Invalid offers and void agreements
Section 30 of the Contracts Act: 'agreements, the meaning of which is not certain, or capable of being made certain, are void'.
Void here means legally unenforceable. An invalid offer will void a contract. So, be very careful!
Abu and Bakar in EXAMPLES 1 (Lexus) and 2 (Jaguar) are willing to sell their cars once you hand over the money.
The Lexus offer says the price is 'maybe RM80000 to RM90000'. Is the offer clear enough for you? NO! The hazy price tag, hazier than a bad October 2015 afternoon, is unclear on how much you need to pay to accept the offer. This sort of contract would be void because of the unclear offer terms (Section 30).
The Jaguar offer makes it clear to you that once you fork out RM25000, your friend must give you the car. The terms of the offer are blindingly clear as a broad haze-free daylight, complete with rainbows and sunshine!
We can say that only the Jaguar offer is valid and capable of acceptance because it is clear on both parties' rights and obligations.
The moral of the story is: a valid offer must be clear, precise and certain. Besides, why would you want a Lexus anyway? Jaguar rocks!
DISCLAIMER CLAUSE: The author is in NO way affiliated with the Jaguar brand in any capacity whatsoever and his car choices does not reflect the official position of AskLegal. However, the gratuitous donations or sponsorship from Jaguar are MOST welcome in influencing our stance towards this contentious matter.
Picture credits: wikimedia.org